Starting a Lucrative Real Estate Business in Nigeria
One business recognized world over to be very extremely lucrative and undoubtedly profitable is the real estate business. Most of the world’s billionaires are renowned real estate investors, you can check through the Forbes list for yourself. The real estate business is known to be a world class money spinner, bringing profits in huge amounts for the investors. The story is not different in Nigeria, I am sure you will have read the story making rounds on social media which compared the investments of two of Nigeria’s foremost moguls, one in business, the other in music. According to the story, it was stated that they both had the same amount of money in cash some years back, while the latter spent the money on building himself a luxury house, the former went ahead to invest in business. Years later, the former on the list of richest men in Africa, while the latter is not. At the time the luxury house might have seemed a good decision but the investment decision proved a great one in the end.
Also Read: Real Estate Business Plan in Nigeria
Real estate business basically involves the selling or renting out of property consisting of lands and in some cases the buildings on it (if there are any), the crops and other minerals on the land as well. From this you will discover that being involved in real estate business is more than just finding a home for a client, it goes way beyond that. This business sector has grown increasingly popular in Nigeria within the last few years as it is on the list of top investment opportunities in the country. Regardless of the present economic crunch, real estate investors are still smiling to the bank because they are solving a problem which makes them always relevant in the society.
A major advantage of the real estate sector is that the opportunities that abound the sector are unlimited, there are several ways to be involved in real estate, so lack of capital may not necessarily be a challenge. Ultimately, regardless of the arm of the sector one is involved in, they will be making some good profit as long as the business is properly managed. The aim of this article is to fully educate the reader on the different ways they can be involved in the real estate business in Nigeria as well all they need to put in place to ensure that they truly maximize the profit making potential of the business.
Before I go ahead however, I believe it will be beneficial to briefly explain the terms asset and liability from the point view of a finance expert, I will be doing this by stating the definitions given by the well-respected author of the bestseller, “Rich dad, poor dad”, Robert Kiyosaki. Robert Kiyosaki happens to be one of the most successful real estate investors of all time, he defined an asset as anything that puts money in your pocket. On the other hand a liability is anything that takes money from your pocket without providing an opportunity to return more. So for example, if you have a house built or bought and you in turn rent it out to tenants, the house is said to be an asset. If you however have paid in full for the house and you just live in it without using it as an office or a rental, it becomes a liability since it is in no way increasing the money in your account.
Profitability of the Real Estate Business
It is important to consider this before we go ahead with the study of the real estate business. Since we have been able to establish the difference between an asset and a liability it should make this quite easy and understandable. Let me cite this example here, someone bought a plot of land for #500,000 with an intention to build a facility, a year later he decided to sell instead, the plot of land had become #1,500,000. In just a year, he had made an outrageous 150% profit without doing any real work. This is exactly how the real estate business works, people invest and make some mind-blowing profits in a very short time. You can also be a part of this bountiful business, but the question to ask is how?
The Different Investment Opportunities in Real Estate Business in Nigeria
A lot of people as the question how can I be involved in real estate when I do not even have startup capital? Or how can market lands that I have bought when I really do not have any connections? As stated earlier there are several ways to be involved in the real estate business, you just have to understand the sector properly, decide the niche you want to operate in and begin to work with utmost diligence. You can begin in one arm and gradually grow your portfolio till you can expand into other arms and become a superpower in the real estate business. In the next few paragraphs I will be explaining a few of the arms of the real estate sector that you can be involved in.
Land Flipping. It may seem like a complex business from the name but it is as simple as it can get. In layman language it is just buying a land at a certain price and reselling within a short period to make some good profit. This arm of the real estate business is practically the easiest to be involved in, it requires almost no efforts at all. All you need is some money to make an initial purchase and a foundation knowledge of the sector and the land you are about to deal in. folks who have substantial amount of capital can begin with buying acres upon acres but if you have just a little capital you can start with just a plot and gradually grow into the business.
Leasing of Open Spaces. This aspect of the real estate business is also very simple to operate as well as very lucrative and profitable. It is easy, just look for a piece of land or facility to purchase and then rent it out on a makeshift arrangement to people who need it. There are several organizations that are known to always be in need of space, some of them include mechanics, churches, car washes, schools, etc. This way they get to pay you some amount either monthly or yearly, at the same time the property appreciates for future sale. At the end of the day when you are ready to sell off you will probably have made over 200% profit from the property.
Real Estate Agency. This seems to be the easiest of all the arms of the sector to indulge in. This is because you are really not spending any capital, you are basically offering a service. All you need do is seek out properties that are up for sale or rent, find out from the owners how much they want to let them go for and then look for clients to pay for the properties. According to the constitution the agent is entitled to certain percentage of the money paid on any property that was sold or rented through his efforts. This means you can rested assured that the business is backed up legally so you should not be having any problems. The business however requires a lot of hard work and diligence, these two ingredients can make you a top shot realtor in just a few years.
Development of Properties. This is the aspect that requires some good amount of capital. It no longer news that some very rich fellows go around looking for properties to buy, refurbish and then resell or rent out at exorbitant prices. They just need to seek out facilities in cool locations, renovate them or restructure them altogether and then put them up for sale. Most times the profit margin in this business is between 100% and 200% or even more depending on how much excellence is put into the reconstruction work and the affluence of the area the property is located.
Building a House or Office for Rent. This aspect of the real estate business also requires some bit of capital. The idea is quite easy to understand and it is very rampart in our society today. Just get a piece of land, build a structure on it, either a house or an office and rent it out. This way you get to be paid for the rest of your life except of course if you sell off the property.
Tips how to become a successful real estate agent in Nigeria
As you know it no one just goes into a business without taking time to properly prepare for the business. Doing that will spell doom for the business even before it sees the light of day. This part of the article seeks to provide you with the details you should prepare for when starting up your real estate business to ensure success at all levels.
- Take time to properly study and understand the business terrain. It is imperative that you take time to understand the business, study materials relating to real estate business. Find out from people already in the business what they do, how the business is run, what mistakes not to make, what laws guide the business, etc. These will help you understand the business better, it will also help you decide what aspect you want to focus on and how well to develop and treat your customer base.
- From your initial research you should have gotten some knowledge that will help you draw up a business plan. Any business that will succeed must be based on a business plan. This cannot be overemphasized. To this end, draw up a plan showing you vision and mission statements, the different units of your business, where you hope to be in a few years’ time, a projected profit margin, and how much you will need to start among other things.
- Save up some money and raise capital. From your business plan you should have an idea of how much you will need to start up your business. You can then begin to save up money for startup or decide to take a loan. You can also seek out investment partners to make the activity of raising capital easier.
- Register your business and make it legal. This is as important as having a business plan, if you are going to be successful. Your customers need a name that can be trusted, visit the Corporate Affairs Commission and do the needful before you begin running your business. Also ensure that you are registered with the local real estate business directory to avoid unwanted and unnecessary embarrassment.
- Get an office. This is imperative as you will need a place to constantly meet with your clients. This is the place where you can truly project your business image to your clients, the image you project will have a lasting effect on your business.
In conclusion, I believe this article has been helpful to your cause of educating yourself on how to start up a real estate business in Nigeria.
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